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Australia Urged To Take A Leaf From EU On Carbon Tax

by Mary Swire,, Hong Kong

25 April 2013

The Australian Industry Group (AIG) - representing 60,000 businesses spanning manufacturing, services and the mining industry - has continued its lobbying of the Australian Government on carbon tax, drawing on the rejection by the European Parliament of proposals to increase the cost price of purchasing carbon allowances.

The EU parliament was considering whether to force an increase in the cost of carbon allowances, which must be purchased by companies whose operations significantly damage the environment. Due to a surplus of carbon allowances available for purchase, the cost of allowances has fallen steadily since the introduction of the EU's carbon trading scheme, reducing the incentive effect of the scheme for businesses to adopt environmentally-friendly practices. Members of European Parliament voted against the proposals with a narrow majority of 334 votes to 315 in favor.

The AIG has consistently called on the Australian Government to support the unwinding of the fixed price carbon tax in place in Australia, in favor of an internationally-linked emissions trading scheme, which it believes would make Australian companies more competitive.

The Labor Government implemented its carbon pricing mechanism (CPM) on July 1 last year. The CPM requires around 500 large carbon emitters to purchase a permit for each tonne of pollution they release into the atmosphere. A permit for the 2012-13 financial year costs AUD23 per tonne (USD24). This figure will increase on July 1 this year, and again in 2015, when it will reach USD25.40 per tonne.

Urging reform from the Australian Government, the AIG argued: "The EU Parliament's vote to keep carbon prices low highlights how far out of kilter Australia's high fixed carbon prices are. It shows how much Australia will gain by immediately abolishing the fixed carbon tax and moving straight away to emissions trading linked to low European prices."

"Linking internationally and abolishing the fixed price carbon tax now would cut the carbon price by 80% to AUD4, reducing electricity prices by more than AUD0.015 cents per kilowatt hour and taking pressure off trade exposed industries and households. Our emissions targets would still be met through the proven market based mechanism of emissions trading, without further calls on government spending."

"Europe is meeting its targets more cheaply than expected, and they have opted to take those savings to the bank. We should make the most of the opportunity to meet our own targets at least cost."

TAGS: environment | tax | business | mining | Australia | manufacturing | carbon tax | trade | European Union (EU) | services | Europe

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